- Evergrande Seeks Chapter 15 Bankruptcy Protection in the US
- Efforts to Safeguard US Assets Amidst Multibillion-Dollar Debt Negotiations
- China’s Real Estate Crisis and Economic Challenges Continue
Evergrande has filed for bankruptcy in the United States as the real estate crisis in China worsens.
It will enable the heavily indebted corporation to safeguard its assets in the United States as it negotiates a multibillion-dollar settlement with its creditors.
In 2021, Evergrande defaulted on its enormous debts, sending shockwaves through the global financial markets.
Concerns about the world’s second-largest economy have been heightened by issues in China’s property market.
Thursday, China Evergrande Group filed for Chapter 15 bankruptcy protection in a New York court.
Chapter 15 protects a foreign company’s U.S. assets while it restructures its debts.
According to its website, the group’s real estate division has more than 1,300 developments in more than 280 Chinese cities.
It also operates an electric vehicle manufacturer and a football club.
After defaulting on its debt repayments, Evergrande has been working to renegotiate its contracts with creditors.
With estimated obligations of more than $300 billion (£235 billion), it was the most indebted property developer in the world.
The trading of its shares has been suspended since last year.
Evergrande reported last month that it had lost 581.9 billion yuan ($80 billion; £62.7 billion) in two years.
Last Monday, Chinese real estate giant Country Garden warned it could lose $7.6 billion in the first half of the year.
Some of the largest developers in China’s real estate market are unable to secure sufficient funding to complete projects.
Steven Cochrane of the economics research firm Moody’s Analytics stated, “Completing unfinished projects is the key to resolving this problem, as this will at least keep some financing flowing.”
He added that many homes are pre-sold, but if construction is halted, buyers cease making mortgage payments, thereby increasing the financial strain on developers.
Beijing announced earlier this month that China’s economy had entered deflation, as consumer prices fell in July for the first time in more than two years.
China is not experiencing the rising prices that have shaken many other nations and prompted central bankers in other nations to drastically increase borrowing costs.
Imports and exports also fell sharply last month, threatening the economic recovery prospects of the second-largest economy in the globe.
July exports decreased by 14.5% compared to the same month the previous year, while imports decreased by 12.2%.
To stimulate the economy, China’s central bank unexpectedly reduced key interest rates for the second time in three months earlier this week.
